After moving sharply lower early in the session, stocks staged a valiant recovery attempt over the course of the trading day on Tuesday only to once again come under pressure going into the close.

The tech-heavy Nasdaq ended the day down 65.03 points or 0.4 percent at 18,285.16 after plunging by as much as 2.1 percent to a nearly five-month intraday low.

The S&P 500 (SPI:SP500) briefly reached positive territory but closed down 71.57 points or 1.2 percent at a four-month closing low of 5,776.15. The Dow also slumped 670.25 points or 1.6 percent to 42,520.99.

The early sell-off on Wall Street came amid concerns about a global trade war after President Donald Trump’s new tariffs on imports from Canada, Mexico and China took effect.

While some traders used the weakness as an opportunity to pick up stocks at reduced levels, buying interest evaporated in the final hour of trading.

The White House said Trump is proceeding with implementing previously paused 25 percent tariffs on Canada and Mexico to combat the extraordinary threat to U.S. national security posed by unchecked drug trafficking.

Trump also increased the tariff on Chinese imports to 20 percent from 10 percent, claiming the country has not taken adequate steps to alleviate the illicit drug crisis.

Canada responded by announcing 25 percent retaliatory tariffs on C$155 billion of American goods, starting with tariffs on C$30 billion worth of goods immediately and tariffs on the remaining C$125 billion in 21 days’ time.

In a subsequent post on Truth Social, Trump said Canada putting a retaliatory tariff on the U.S. will lead to a reciprocal tariff by the same amount.

Meanwhile, Mexican President Claudia Sheinbaum said her government has made “contingency plans” to respond to the new tariffs.

China also said it would impose additional tariffs of 10 to 15 percent on several agricultural goods, including soybeans, corn, dairy and beef.

“Investors were desperately hoping that Trump would delay tariffs on Canada, Mexico and China at the eleventh hour, yet the US president has stuck to his guns and brought them into power,” said Russ Mould, investment director at AJ Bell.

“Naturally, the recipients have started to retaliate and that has raised the prospect of a full-blown trade war,” he added. “Investors knew there was a real chance this would happen but quietly hoped it would all go away and simply be Trump having a bark worse than his bite. Not this time around.”

Sector News

Banking stocks turned in some of the market’s worst performances on the day, with the KBW Bank Index plunging by 4.6 percent to its lowest closing level in almost two months.

Substantial weakness was also visible among airline stocks, as reflected by the 3.9 percent nosedive by the NYSE Arca Airline Index. The index plummeted to a more than four-month closing low.

Brokerage stocks also showed a significant move to the downside, dragging the NYSE Arca Broker/Dealer Index down by 3.4 percent.

Steel, utilities and commercial real estate stock also ended the day notably lower, while some strength emerged among gold and semiconductor stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slumped 1.2 percent, while Hong Kong’s Hang Seng Index fell by 0.3 percent.

The major European markets also showed significant moves to the downside. While the German DAX Index plunged by 3.5 percent, the French CAC 40 Index dove by 1.9 percent and the U.K.’s FTSE 100 Index tumbled by 1.3 percent.

In the bond market, treasuries moved modestly lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.0 basis points to 4.210 percent after hitting a low of 4.106 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the latest U.S. economic data, including reports on private sector employment, service sector activity and factory orders.

SOURCE: RTTNEWS